Running a business has many potential risks. In an unexpected moment, a death or disability can destroy the business you as an entrepreneur have worked so hard to build. The case of surviving business owners and the deceased's heirs becoming embroiled in bitter ownership battles while the banks call in their loans is not uncommon. Client's can quickly lose confidence in your business and flee to competitors while your family and heirs may not receive what is due to them.
How do you retain the best employees, protect your income and meet your monthly overhead expenses if you are unable to work ?
How will you finance future growth and expansion ?
The best solution to these problems is business insurance policies. Business insurance solves the problem of liquidity in the business when a member passes away or becomes disabled so that the business can pay out the deceased's heirs in return for the deceased's shares in the business or have sufficient capital to employ somebody who can fill the role of the deceased without the business having to sell any of it's assets.
While this may sound simple there are quite a few legal implications that have to be taken note of for the buy and sell agreement to be valid and to ensure that the underlying life insurance policies are compliant with tax laws etc and so we strongly recommend speaking to a financial advisor. Just contact us and one of our skilled financial advisors will be able to assist your business with it's business insurance quotes and needs.
A buy & sell agreement is a legal agreement between the business owners which obliges an owner/shareholder to sell their share of the business to the remaining shareholders in the event of the original shareholder dying or becoming disabled. This removes the risk of family members who have no knowledge or expertise in the running of the business becoming shareholders and placing expectations on the business that the original shareholder or current shareholders would not.
An individual risk or life insurance policy is most often used to cover the risk of the business not having enough cash available to meet it's obligations in terms of the buy & sell agreement in the event of a shareholder's untimely death or disability.
Most businesses have an individual who runs the business that is a "key man" i.e. without that key man the business would not be able to function as it does. This has the potential to very quickly turn a good business in to a cash eating machine.
Key Man Insurance does not require a legal agreement between the shareholders as it is an individual risk or life insurance policy taken out on the life of the Key Individual and owned by the company. In the veent of the key individual's death, disability or severe illness the payment on the policy would be paid out to the company which gives it cash to find a suitable alternative.. often at a much higher cost than the original key man. This ensures that the remaining shareholders interest in the business is well protected.
If you would like to get further information on business insurance including Buy & Sell Agreements and Key Man Insurance please send a mail to email@example.com or leave your details in the business insurance quote request form.